Agreement of Purchase and Sale of Shares by Shareholders

By | June 25, 2016

Selling and buying are simple terminologies to understand, but if the two procedures are involved in a serious business dealing for example sale and purchase of stock shares, then, these buying and selling would be proceeded in an authorized manner to avoid future conflicts. It would be impractical for companies and shareholders to be into a business of purchasing and selling shares with just verbal commitments. The business setting is competitive, fluctuating and habitually dangerous. The persons that extract proceeding through valid documentation can succeed more quickly and effectively. Keeping such things in mind a sale and purchase agreement is technically drafted. This agreement has its own format. The agreement has to be signature by the buyer and seller, generally, under the supervision of an authorized attorney.

When the business is running on an expanded scale, it is usually not owned by a single entity. , rather several other companies or individuals have a partnership in that business owner ship or in other terms we can say that all these entities have shares in the business. When the business gains profit, the percentage amount of profit is distributed among all share holders or partners depending upon the amount invested by each partner. This is a world-wide style of business in which a company put its stock of share in the stock exchange.

From the stock exchange ,stock brokers commonly sell the shares of a business to  the interested buyers.Moreover,sometimes the share holder himself sell his stock share directly to the purchaser, without any mediator. When this type of stock shares are sold and purchased, it becomes vital to document the sale and purchase in writing. Therefore, a sale and purchase agreement has been written to be used as a valid legal proof when needed.

All these procedures of buying and selling of share stocks and then writing them in a buy-sell share stock agreement provides a dense, organized network of dealing and running business. The benefit is that when the buyer and seller write a signature agreement under legal clauses ,they  get the legal evidence to present in the future and everybody can trust them in future for fair business dealings.

Likewise, possessing a buy-sell share stock agreement in a written format can help in the case of disputes. Suppose the buyer or seller of the share stocks, if refuses to pay the documented rates, then this agreement can be presented in the court to resolve the matter. This type of agreement can also help in those cases when many people have invested shares in a big business and depend entirely on their profits. Suppose if the ownership of such business changes due to disability, death or any other circumstances ‘then such agreement will help to decide how the future investment is conducted and other taxation features..

The summarized components of such agreement contain the name and short details of buyer and sellers. The details of the shares being sold and purchased. The selling price per share. Warranties from both the parties’. Pre and post closing covenants. Termination clauses and the penalties applied in case of violating the document. The agreement has signature spaces for both the buyer and seller authorities and all the associated details about the buying and selling of the stock shares.

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Agreement of Purchase and Sale of Shares by Shareholders

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